Household energy bills set for biggest rise for a decade
Most of the big energy suppliers are increasing their prices this autumn, as the regulator, Ofgem is allowing the energy price cap to be lifted by as much as 13% from October. The 11 million households on default tariffs will now pay around £1,288 a year with a similar price hike for the 4 million households on prepayment meters. This increase will affect about half the UK households. It is being driven by large price increases in the wholesale prices for energy, which are at their highest level for more than a decade. The regulator, Ofgem said the price cap for default energy deals would be raised to allow suppliers to cover these extra costs.
Ofgem chief executive Jonathan Brearley says “The reason the price cap is going up is there has been a record increase in energy prices across the board, not just in gas and electricity but in petrol and diesel.” However, he is encouraging customers to switch supplier to avoid the tariff increases. “You don’t have to live with this tariff. The price cap is a backstop.” The Government are also encouraging people to review their energy bills. A spokesman for the Department for Business, Energy and Industrial Strategy said: “While the price cap still saves 15 million households up to £100 a year, the best way for consumers to keep energy bills down is to shop around for the cheapest tariffs on the market.”
Smaller suppliers are at risk of going out of business
The energy industry is bracing for a new wave of small supplier failures amid warnings that many cannot survive soaring wholesale gas and electricity prices. Keith Anderson, chief executive of Scottish Power, one of Britain’s biggest suppliers, said: “A massive train crash is about to happen because their models are unsustainable. Prices have gone through the roof and they can’t cope.” When a supplier fails, the rest of the industry is forced to pick up the tab for any unmet payments, as well as for customer credit balances so that households are not out of pocket.
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More about our guest blogger, Alexis Hutchinson
Alexis Hutchinson is an authorised UW Partner, where she shows people how they can save time and money by combining their utilities into one monthly payment. She works part time as the first female Principle Alto Lay Clerk (professional adult singer) at Worcester Cathedral. Visit her website or her LinkedIn page to find out more.